Month: December 2016

Fitbit (FIT) surged over +7% earlier this week after the Fitbit app jumped to the #2 spot on iTunes on Christmas Day. Although short interest was 30% of float, there was a desire in the market not to be offside if the company’s wearable bands were once again a popular gift for the holiday season.

As part of our curated Twitter feature in our Equity Data Terminal, we have mountains of data on the most influential finance Twitter accounts. To our surprise, the most influential accounts aren’t professional content creators or major news organizations. Nor are they famous money managers with billions in assets under management.

While many equity analysts currently do not use finance Twitter, the early adopters of finance Twitter likely stand on the vanguard of where news is headed. Firstly, traditional news outlets like newspapers and TV shows must create filler content on a slow news day. Social media is a more flexible channel for receiving news, expanding where there is news (e.g. Trump winning the election) and contracting when there isn’t. Secondly, curation by peers lets the cream rise to the top. Formerly obscure research such as AZ Value’s blog was distributed on finance Twitter well before Valeant issued an 8-k rebutting AZ Value (and before the dramatic fall in Valeant’s share price). That type of niche content is unlikely to appear in more mainstream channels.

As we get ready for 2017 and spending at least the next four years with a Tweeter-in-Chief in the White House moving markets, we often find our client conversations turning towards the effective use of social media in professional investment management. Consider this your cheat sheet.

High Level Takeaways

FinTwit’s most influential accounts are dominated by equity analysts who put out insightful content in their spare time.

Second to equity analysts, there are the activist shorts that use Twitter to promote their campaigns. Like it or not, their ability to move markets makes them relevant and difficult to ignore.

Following the activists shorts, there are niche news accounts (e.g. Activist Shorts, Marketfolly) that mainly aggregate content and curate news specifically for equity analysis. These accounts are far more influential than the official accounts of major news outlets, suggesting that most of finance Twitter prefers the curation of peers and aggregators.

The big picture is that peer-curated news is poised to become a bigger headwind for traditional news. Whereas many newspapers previously enjoyed local monopolies, they now face massive competition in a social media world. This is a world where anybody can create, distribute, and promote their content. There are no barriers to entry anymore. News titans like CNBC and Bloomberg (with their teams of professional journalists) have fewer finTwit follows than a hedge fund manager from Australia who blogs on the side (@John_Hempton). If social media’s popularity grows, the trend will likely continue to erode the returns on capital that traditional media companies have enjoyed.

ZNGA stock is off 15% since launching Dawn of Titans worldwide on Dec 8. While it is normal for gaming companies to see sell-the-news reactions following expected catalysts, the evidence that Mosaic users are seeing with Apptopia data indicate that there is serious cause for concern as the momentum at launch has completely fizzled out. We have gotten great feedback from you on our first post detailing what we were looking for on launch day, and thought it was time to take a look at the real data 2 weeks in.

The Current State of Affairs

As we established in part 1 of this post, iOS is overwhelmingly likely to be the strongest driver of overall revenues. This is where the key worldwide numbers for DoT shake out two weeks in:

While engagement is still holding up at around 30%, downloads seemingly peaked at a total of 1.86m and DAU’s peaked out at 567k. This was likely not helped by the (well telegraphed) Dec 15 launch of Super Mario Run which is now firmly at the top spot in iOS rankings.

Heads Up

To the extent that Dawn of Titans was never meant to be a mass-appeal casual game, the lack of extended growth is fine as long as monetization of the hardcore gamers holds up, but we are also seeing revenue and ARPU peak out (although it is very early days still). Using Sentieo’s advanced visualization technology, we are able to put games heads up to each other to answer important questions: did Dawn of Titans meaningfully threaten Clash of Clans?

The data does not look good.

As always, we welcome all feedback on these thoughts. As always, Sentieo Mosaic subscribers can request access to Apptopia data in their charts.

Wedbush (bull): “Our bookings estimate calls for q-o-q growth of $24 million, $15 million higher than consensus; we think that Dawn of Titans may add $25 million or more of bookings (in 1Q17)”

Cowen (bull): “We view the launch and performance of Dawn as a key catalyst for shares.”

Credit Suisse (bear): “It remains to be seen whether Dawn of Titans will add to the win streak.”

Because the app has already been in the wild for years AND is a material part of the investment case for ZNGA, this is a textbook example to analyze with Sentieo’s Mosaic tool and our newest data partner, Apptopia. Apptopia provides the most accurate app store downloads, revenue, and SDK data for every mobile app & every publisher in the world, and we are excited to partner with them to show how the best-informed investors are using their data to drive investment decisions. Our goal with Part 1 of this post is to provide “Three Things You Should Know” leading into the Dawn of Titans global launch. Read More

$LULU is down over 35% since its Q2 earnings print, driven by a traffic-induced comp miss and now increasing fears of sustained markdowns. On the latter we used Twitter data to investigate whether there is a discernible trend in discounting that has persisted during the pre-Holiday period.

We queried the full firehose for tweets mentioning both Lululemon and any derivatives of discounting/promotional activity and normalized it against total tweets mentioning Lululemon, generating the pink line in the chart below. We noticed a significant increase in promotional tweets in Sep/Oct vs. the same period last year (see pink line within the red boxes), agreeing with cautious sentiment for Q3 margins. However, the trend seems to have improved during November with promotional tweets rapidly falling back in line to Nov 2015 levels (see pink line within blue boxes). With sentiment so low and largely elevated markdowns priced in, a return to normalization in November could be enough to provide some relief.

Want to see a similar analysis for other consumer names? Contact us at hello@sentieo.com!

Like many of our clients, Sentieo is gearing up to cover what is likely to be the biggest technology IPO of 2017. We will be doing a series of 5 minute reads, reintroducing potential investors to key parts of the investment story. If you would like to receive notification when these go out, you know what to do.

Evan explaining the Why of Snapchat with none of the high-production-fluff.

High Level Takeaways

On average, Snap rolls out a major new product once every three months.

In the past two years, this product strategy was significantly supported by rolling up adjacent products. This implies acquisitions likely to appear as products soon are Mobile Search and Augmented Reality.

The last two years’ $350m acquisition bill is only 70% of its Series D, indicating the company likely had both tremendous ROI on its acquisitions as well as a sizable war chest for more rollups.

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